Just about every community in America has benefited from HUD-funded housing, rehabilitation, infrastructure improvements, and public facilities such as community centers, parks, and libraries. But as a Department, our job is not done without going beyond the “bricks and mortar” of communities to establish economic opportunities and self-sufficiency for residents of these communities. This HUD-funded construction and rehabilitation results in new employment and contracting opportunities within the community. Congress passed Section 3 to ensure that low- and very low-income residents benefit from those opportunities, multiplying the effect for HUD's investment in local economies in the form of wages to residents, contracts to businesses that are owned by or employ them, and sales revenue for those in the community that provide services to these persons.

Section 3 requires that when certain HUD-funded recipients hire new personnel that they give preference to low- and very low- income persons and/or businesses owned by these persons or that substantially employ these persons, and that 30 percent of these new hires be Section 3 covered persons.

HUD ensures compliance with Section 3 in three ways. First, the Department requires all Section 3 covered businesses to submit yearly reports of their Section 3 activities. The Department monitors these reports for compliance. Second, as an additional check, the Department conducts compliance reviews of entities subject to Section 3. Third, the Department investigates complaints from individuals alleging that a recipient or contractor failed to comply with Section 3. If an entity is found to be in noncompliance with Section 3, the Department works to achieve an informal resolution before taking more aggressive sanctions.

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